It is hardly surprising that the German discounters Aldi and Lidl are taking market share from the major supermarkets chains in the UK. Price is all-important in these hard economic times as incomes are being squeezed.
But, perhaps what is surprising, given its reputation for restricted choice and rock bottom prices, is that Aldi in particular is rated highly for the quality of its fresh food, its range of products and how easy it is to find items. In fact shoppers questioned in a survey conducted by consumer organisation Which? said they actually liked the fact that there were fewer items to choose from as it meant that they got their shopping done more easily and more quickly than in other supermarkets.
Which? talked to more than 7.000 U.K. supermarket customers about what they liked and disliked about the stores where they bought their groceries and discovered that Aldi had taken over from upscale chain Waitrose as the nation’s favourite supermarket, with Lidl coming in fourth.
The voting was close with Aldi’s score of 76 percent just edging out Waitrose at 75 percent. Ever since the poll began in 2007 Waitrose has been voted the U.K.’s best supermarket.
So, where did Aldi pick up points? According to Which? the single most important factor for shoppers when deciding which supermarket to buy from is that it offers good value for money. “And you clearly see Aldi as number one in this department,” said a spokesman.
“Shoppers told us that supermarkets generally aren’t helping to ease the impact of increasing food prices on their day-to-day budgets. But Aldi is a rare exception — 80 percent think it’s helping with this.”
While Aldi and Lidl are picking up shoppers and trying to attract more upscale customers with advertising campaigns promoting luxury items such as fresh lobster and Serrano ham for Christmas, the U.K.’s “Big Four” supermarkets are not standing idly by as sales slump and profits tumble. Tesco and Morrisons are unveiling plans to match the discounters’ prices, and Asda and Sainsbury’s will not be far behind.
Morrisons, the nation’s fourth largest grocer, has been the hardest hit. On 13 March it reported a full-year loss of GBP 176 million (USD 292.7 million) and further deterioration of like-for-like sales. CEO Dalton Philips has warned that Aldi and Lidl threatened “the biggest supermarket crisis since the 1950s.”
Calling the situation a crisis might be rather melodramatic because Morrisons has fallen behind the other major U.K. supermarkets in its failure to invest in an online sales service and not opening smaller convenience stores. It is now trying to catch up in those areas and meanwhile has committed GBP 1 billion (USD 1.7 billion, EUR 1.2 billion) to reducing its prices to combat Aldi and Lidl.
Last month Tesco, the U.K.’s biggest supermarket, announced it was launching an incremental investment of GBP 200 million (USD 332.6 million, EUR 239 million) to drive prices down on essential items as it accelerates its efforts to turn around its U.K. business.
What could all this mean for seafood suppliers? Aldi and Lidl are hardly known for their sales of fresh fish tending to concentrate on frozen and canned products including value-added dishes. At Christmas time there is often an eye-catching promotion where lobster has featured in the past, but this is a one-off.
Will the major supermarkets trim their fresh fish operations, which have often acted as loss leaders?
Morrisons has invested heavily in fresh fish processing and sales; does its falling profits indicate that this has been the wrong way to go?
In terms of own label and branded frozen products, the drive to be competitive could really put the squeeze on manufacturers who will no doubt say that already they have little room to maneuver.
Difficult times lie ahead.
